US Dollar Price Forecast: Dollar Steadies Before Key CPI and ECB Policy Signals – GBP/USD and EUR/USD

Market Overview

The U.S. Dollar Index (DXY) steadied around 97.90 as traders positioned ahead of key inflation figures. Wednesday’s data showed U.S. producer prices falling 0.1% month-on-month, missing forecasts of 0.3%, signaling softer demand pressures.

Attention now shifts to Thursday’s Consumer Price Index (CPI), expected to rise 0.3% m/m and 2.9% y/y. A weaker print could reinforce expectations of multiple Federal Reserve rate cuts this year, weighing on the dollar. However, stronger inflation risks pushing back against aggressive easing bets.

Euro: ECB Meeting in Spotlight

The euro trades cautiously ahead of the ECB’s policy decision, where rates are expected to hold at 2.15%. Market focus is on President Lagarde’s comments for clues on future easing.

With eurozone growth slowing and inflation pressures muted, traders remain divided on whether the ECB has reached its peak tightening phase.

Any dovish shift could pressure the euro, particularly if U.S. inflation surprises on the upside.

Sterling: Domestic Data Risks

The British pound holds steady near $1.35, supported by positioning ahead of Friday’s UK GDP and industrial output releases. Expectations point to stagnation in July growth, raising questions about the Bank of England’s policy path.

While the BoE is unlikely to adjust rates immediately, weaker data could fuel speculation of future cuts. For now, sterling remains sensitive to U.S. dollar moves and broader risk sentiment.

US Dollar Index (DXY) – Technical Analysis

The U.S. Dollar Index (DXY) is trading near 97.92, testing resistance around the 50-EMA at 97.86. Price recently bounced from support at 97.59, forming higher lows, which signals short-term recovery attempts. However, the 200-EMA at 98.09 remains a key barrier, aligning with broader resistance near 98.16.

Candles show rejection wicks at higher levels, suggesting hesitation as buyers approach this zone. The RSI is at 56 points, indicating moderate momentum, not yet overbought, leaving room for further upside.

If DXY closes above 98.16, the next target could be 98.42. On the downside, failing to hold above 97.59 would expose support at 97.36 and weaken bullish momentum.

GBP/USD Technical Analysis

The GBP/USD is trading near $1.3513, slipping after failing to hold its recent bullish channel. Price is testing support at the 50-EMA around $1.3504, while the 200-EMA at $1.3477 provides a stronger floor below.

Candles show hesitation with small-bodied formations, suggesting indecision as momentum cools. The RSI at 48 is neutral, showing neither clear buying nor selling dominance.

A sustained break under $1.3482 could trigger a move toward $1.3447, while reclaiming $1.3550 would shift focus back to resistance levels near $1.3590 and $1.3620.

EUR/USD Technical Forecast

The EUR/USD is trading near $1.1690, slipping after breaking below its short-term trendline support. Price is now testing the 50-EMA at $1.1696, with the 200-EMA lower at $1.1658 acting as stronger support. Candles show rejection near $1.1718, confirming sellers remain active at higher levels.

The RSI at 44 points to weakening momentum, leaning bearish but not oversold. If EUR/USD stays below $1.1718, the bias favors further downside toward $1.1660 and possibly $1.1633.

On the upside, reclaiming $1.1743 would ease selling pressure and open the way back to $1.1779. For now, the pair remains under pressure with sellers holding the near-term advantage.